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Petitioner: MESSRS AZAM AGENCIES LTD. AND ANOTHER VS Respondent: THE TRANS-OCEANIC JUDGMENT
Court Name: Sindh High Court Judge(s): Durab Patel Title:MESSRS AZAM AGENCIES LTD. AND ANOTHER vs THE TRANS-OCEANIC
JUDGMENT
Reported As: PLD 1971 Karachi 56 Result: Suit decreed partly Judgment JUDGMENT This is a suit for damage to cargo under the Carriage of Goods by Sea Act, 1925. The first defendant is a carrier, and, according to the plaint, on or about 21/22nd July 1965, the first plaintiff had shipped a consignment of 1052 bales of cotton yarn and cotton piece goods (hereafter called the said bales) by the s. s. Ocean Energy, a steamer owned by the first defendant, under three bills of lading issued by that defendant. The s.s. Ocean Energy reached Chittagong on or about 3rd August 1965 and discharged the said bales. As some of the said bales were landed damaged and torn, the first plaintiff requested the second defendant, who is the first defendant's agent in Chittagong, to hold a joint survey of the damage and loss to the said bales. Accordingly, a joint survey was held in Chittagong by Messrs James Finlay & Company Ltd. and three survey reports were issued by Messrs James Finaly & Co. According to these survey reports, some of these bales were damaged by water and there was also a shortage of contents in some of the said bales. Therefore the first plaintiff called upon the defendants to pay compensation for the loss and damage thus caused by the failure of the defendants to take proper care of the said bales, but they neither paid the claim of the first plaintiff nor sent it the survey reports of the damage to the said bales, therefore as the said bales were insured with the second plaintiff, the second plaintiff paid the first plaintiff a sum of Rs, 27,069.25 as compensation for the loss and damage to the said bales and was thereby subrogated to its rights. Hence the suit by the plaintiff in which they seek the recovery of a" sum of Rs, 27,069.25 with interest and costs from the defendants. 2. In its written statement the first defendant has admitted that it had received the said bales for shipment and that, as the said bales were danaged, they were surveyed by Messrs James Finlay &
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Company Ltd. But it has denied liability for the alleged damage and shortage and has submitted that the said bales "were already wet at the time of shipment and the damage was not caused by the hands of the defendants". It has further expressly denied that the said bales were in apparent good order and condition when they were received for shipment at Karachi and has stated that it had therefore issued qualified bills of lading correctly showing the condition of the said bales at the time of shipment. It has further pleaded that, as the shippers had accepted these qualified bills of lading without any protest, the plaintiffs were estopped from contending that the said bales were shipped in apparent good order and condition. It has taken various other pleas, which it is not necessary to consider, and has submitted that the suit against it should be dismissed with costs. 3. The second defendant has filed a separate written statement in which it has pleaded that as it is the local agent of the first defendant it has been wrongly impleaded and has therefore claimed compensatory costs under section 35-A, C. P. C. Without prejudice to this submission, it has adopted the written statement of the first defendant. 4. On these pleadings, several issues had been framed but, as Mr. Hassan, learned counsel for the defendants, dropped two of the issues raised by him, only the following issues remain: (1)Whether the goods were damaged while they were in the ship's custody? (2)Whether the quantum of damages assessed by these surveyors is correct; if so, whether the defendants are liable for the same or any part thereof? (3) Whether the second defendant has been wrongly impleaded and are entitled to costs? Both parties have examined witnesses and produced documents on these issues both before me and on commission in Chittagong, and I shall now consider this evidence. 4. Issue No, 1.--In order to prove damage to the said bales the plaintiffs have examined Mr. 1. C. Mendes, and he has produced and given evidence about the relevant survey reports (Exh. 1 to 3 Ctg.) which I shall briefly examine. According to survey report No, S. R. 901 (Exh. 1 Ctg.) 45 bales of cotton piece goods shipped under Bill of Lading No, 339 were landed damaged by water. According to survey report No, S. R. 900 (Exh. 2 Ctg.) 58 bales of cotton yarn shipped under bill of lading No, 338 were damaged by water, whilst six bundles of cotton yarn were missing from the contents of these bales. Finally, according to survey report No, S. R. 899 (Exh. 3 Ctg.) 9 bales of cotton piece goods shipped under Bill of Lading No, 340 were damaged by water. Further, according to the three survey reports the damage by water was, in all cases, caused by fresh water and not saline water. 5. In view of this evidence, the plaintiffs have proved the damage for which they have claimed compensation. But in order to succeed in their claim, they have not only to prove the damage suffered by them but also to show that the damaged bales had been shipped in good order and condition, and unfortunately for their case, all the bills of lading are qualified and contain an endorsement that the bales received for shipment were wet and stained by water as specified in the said bills. The evidence of Major Nanavati, the first defendant's manager, has proved that these endorsements were typed on the bills of lading by the first plaintiff on the basis of the mates' receipts (Exhs. E, F and G), and as these mates' receipts were prepared when the said bales were being loaded on the s. s. Ocean Energy, these endorsements about damage by rain show the apparent order and condition of the said bales at the time of shipment. Now, as according to all the survey reports also, the bales had been damaged by fresh water and not saline water, it is necessary to compare the endorsements on the bills of lading with the quantum of loss assessed by the surveyor in order to determine whether the damage in dispute had occurred before or after shipment. According to Bill of Lading No, 339, 135 bales were wet and stained by water at the time of shipment. According to Bill of Lading No, 338, 572 bales of cotton yarn were wet and stained by water prior to loading, whilst 19 bales were torn. Finally, according to Bill of Lading No, 340, 30 bales were wet and stained by rain water prior to loading. Article 3, rule 4 of the Carriage of Goods by Sea
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Act, 1925, to which I shall refer as the said Act, prescribes that the bill of lading shall be prima facie evidence of the apparent good order and condition of cargo at the time of shipment, therefore, as the number of bales damaged by rain, as shown in the bills of lading (Exhs. 1 to 3 Ctg.) far exceed the number of bales damaged by fresh water, which were surveyed by the surveyor, prima facie the damage in dispute occurred before shipment and not whilst the said bales were on the s. s. Ocean Energy. I may also observe here that Mr. Kazmi has not challenged the correctness of the endorsements on the bills of lading and has not even attempted to argue that the bales were damaged by water whilst they were on board the s. s. Ocean Energy, but has advanced a very ingenious argument that they were damaged prior to shipment which I shall consider under the next issue. In view of learned counsel's submission and the evidence on the record, I decide this issue against the plaintiffs. 6. Issue No, 2.--As Mr. Hassan, learned counsel for the defendants, relied on the evidence of Mr. Mendes, the surveyor, and the evidence of the survey reports, the quantum of damage assessed by the surveyor is not in dispute, and the points for determination under this issue are how the damage occurred, whether the defendants and in particular the first defendant are liable for this damage, and the amount claimed for compensation. 7. Mr. Kazmi submitted that, although the first defendant was responsible for what he called the entire loading operations of the said bales, which included operations connected with loading before the said bales had been loaded on the s. s. Ocean Energy, the endorsements on the bills of lading only showed the apparent order and condition of the said bales when they had been loaded on the s. s. Ocean Energy, so that they did not show the condition of the said bales when the first defendant had received them or was deemed to have received them as a carrier. Further, according to learned counsel, the said bales had been damaged by rain after the first defendant had received them or was deemed to have received them, but before they had been loaded on the s. s. Ocean Energy, which was only the last stage of the loading operations, therefore as this damage had occurred whilst the said bales were in the first defendant's custody, the first defendant was liable for the consequent damage. Learned counsel could not specify the exact scope of the entire loading operations, nor the exact point of time when the first defendant had become responsible for the said bales. But he submitted that the bales of piece goods were damaged at Juna Bunder before they had been loaded into lighters whilst the bales of cotton yarn had been damaged by rain on the quay side after they had been discharged from railway wagons, and in both cases the first defendant was responsible for the consequent loss. 8. The arguments of learned counsel are based on a question of fact, namely, that the first defendant had received the said bales before they had been loaded on the s. s. Ocean Energy, and as this allegation has not been pleaded, on this ground alone, the arguments advanced cannot be entertained. However, in deference to the ingenuity of the arguments of learned counsel and the importance of the questions raised, I shall examine these arguments. 9. The first defendant can be liable for damage to the said bales before they had been loaded on the s. s. Ocean Energy either under the provisions of the said Act, or of the Karachi Port' 'Trust Act or under the terms and conditions of the contract a affreightment contained in the relevant bills of lading. 10. I shall first consider the provisions of the said Act in so far as they are relevant to the arguments advanced before me. Article 1(b) in so far as it is relevant, reads as follows : -- "Contract of carriage applies only to a bill of lading or any similar document of title in so far as such document relates to the carriage of goods by sea5 5 Sub-rule (e) then states :-- Carriage of goods covers the period from the time when the goods are loaded on to the time when they are discharged from the ship."
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Article III states: "Subject to the provisions of Article 6 under every contract of carriage of goods by sea the carrier in relation to the loading, handling stowage, carriage, custody, care and discharge of such goods shall be subject to the responsibilities and liabilities and entitled to the rights and immunities hereinafter set forth." Article III imposes a duty on the carrier to provide a seaworthy ship and prescribes its liabilities, whilst Article IV contains the rights and immunities on which a carrier can rely for his defence. These provisions were construed in Pyre tie Co. Ltd. v. Scindia Steam Navigation Co. Ltd. and as this judgment has the approval of the Supreme Court in Elm' & West Steamship Co. v. Hossain Brothers and others I shall consider it. The facts of this case were that the plaintiffs had shipped a piece of Machinery, a fire tender, and as it was being lifted on board the defendant's steamer by its tackle and before it was across the it was, through the fault of the ship, dropped and damaged. The carrier repudiated liability on the ground that the damage had occurred before the cargo had crossed the ship's tackle. According to the older English Authorities, loading was a joint operation between the shipper and the carrier and, as pointed out by Devlin, J. those authorities had laid down the rule "that loading is a joint operation, the shipper's duty being to lift the cargo to the rail of the ship (I shall refer to them as the first stage of the loading) and the ship owner's duty to take it on board and stow it (I shall refer to that as the second stage)." Devlin J., (as he then was) did not approve of this view, and after examining the provisions of the said Act and especially the liabilities imposed on the cargo under Article 111, he observed at page 163 as follows:-- "Article III (2), for example, provides: "the carrier shall properly and carefully load", etc. If "load" includes both stages, does that oblige the shipowner, whether he wants to or not, to undertake the whole of the loading? If so, it is a new idea to English lawyers, though, perhaps, more revolutionary in theory than in practice. But, if not, and "load" includes only the second stage, then should it not be given a similar meaning in Article II with the result that immunity extends only to the second stage? There is, however, a third interpretation to Art. III (2). The phrase "shall properly and carefully load "may mean that the carrier shall load and that he shall do it properly and carefully, or that he shall do whatever loading he does properly and carefully. The former interpretation, perhaps, fits the language more closely, but the latter may be more consistent with the object of the rules. Their object as it is put, I think, correctly in Carver's Carriage of Goods by Sea, 9th Edn., p. 186, is to define, not the scope of the contract service, but the terms on which that service is to be performed. The extent to which the carrier has to undertake the loading of the vessel may depend not only on different systems of law but on the custom and practice of the port and the nature of the cargo. It is difficult to believe that the rules were intended to impose a universal rigidity in this respect, or to deny freedom of contract to the carrier. The carrier is practically bound to play some part in the loading and discharging, so that both operations are naturally included in those covered by the contract of carriage. But I see no reason why the rules should not leave the parties free to determine by their own contract the part which each has to play. On this view, the whole contract of carriage is subject to the rules, but the extent to which loading and discharging are brought within the carrier's obligations is left to the parties themselves to decide." I am in respectful agreement with these observations, and applying the principle laid down in these observations I hold that the first defendant's liability commenced when the said bales had been lifted by the s. s. Ocean Energy's tackle, or, at the earliest, when they had been received by the first defendant for this purpose. But there is nothing in the judgment or in the said Act to support learned counsel's submission that the first defendant had become responsible for the custody of the said bales as soon as they had been brought to Juna Bunder or to the quay side from where they were eventually loaded. 11.There is also nothing in the provisions of the Karachi Port Trust Act or in the terms of the bills of1 2
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lading issued to the plaintiffs to support Mr. Kazmi's argument that the first defendant had accepted responsibility for the said bales at some earlier stage of the loading operations. However, learned counsel submitted that his argument was supported by the judgment of the Supreme Court in East & West Steamship v. Hossain Brothers and others and I shall now consider this judgment. 12.The facts in the judgment cited were that the carrier, the East and West Steamship Company, had contracted under its bills of lading to deliver cargo to the respondents at Chittagong, and the cargo had been damaged in a lighter which was unseaworthy. However, the bills of lading contained a cesser of liability clause which stated that the cargo would be discharged into lighters at the outer anchorage, Chittagong at the shipper's risk and that the carrier's liability "shall absolutely cease when the goods are free of the vessel's tackle and thereupon the goods shall be at the risk for all purpose and in every respect of shippers or consignees." On the basis of these clauses the carrier submitted that its liability as a carrier under the said Act had terminated as soon as the respondent's cargo had been discharged from the ship's tackle, therefore it was not responsible for the damage irrespective of how it occurred. In repelling this contention their Lordships held that the carrier's liability continued until the respondent's cargo had been delivered at Chittagong and in coming to this conclusion they had approved of the judgment of Devlin J. in Pyrene Co. Ltd. v. Scindia Steam Navigation Co. Ltd. to which I have already referred. According to learned counsel, this judgment supported his argument by panty of reasoning, but the carrier's liability in the judgment cited was based on the provisions of the said Act and the terms of the contract of affreightment contained in the relevant bills of lading. The judgment can support learned counsel's argument only if he can show that in the instant case the first defendant had become liable for the said bales either under the provisions of the said Act or under the terms and conditions of its bills of lading. As learned counsel's argument is not based either on the provisions of the said Act or the terms and conditions of the first defendant's bills of lading, the judgment cited is of no assistance whatever to his argument. 12-A. Learned counsel then submitted that his case was supported by a passage in Carver's Carriage of Goods by Sea, 11th Edition, para. 198. This para states: - "The shipowner becomes responsible as a carrier for all goods which have been delivered to him, or to his authorised servants, for the purpose of being carried. It is not necessary that they should have actually got on board. Thus, delivery, to the mate on the quay, along side which the vessel is lying, is sufficient. And if the goods have to be taken to the ship in lighters, and that is done by the shipowner, he becomes responsible, in the absence of express stipulation or custom to the contrary, from the time of taking delivery for the purpose of lightening them. In each case the question is, had the goods been delivered into the ship owner's custody for the purpose of being carried ? The usual course, when a vessel is lying along side a quay, appears to be for the shipper to place the goods on the quay, and to take a receipt therefrom the mate or person in charge of the ship; and for the ship to do the work, and bear the expense of putting the goods on board." I agree with learned counsel that these observations state the correct law. The principle contained in these observations is that the carrier's liability commences either when the goods are loaded into its lighters or when they are delivered to it against a document such as a mate's receipt, and I shall now examine whether the plaintiff's case is supported by these observations. 13. I shall first consider the plaintiffs' claim for damage to its bales of cotton piece goods. It is common ground between the parties that these bales were brought to Juna Bunder in trucks owned either by the first plaintiff or its clearing agent and unloaded at Juna Blander. Thereafter, at some time, which is not known, these bales were loaded into lighters hired by the first plaintiff or its clearing agent and delivered from these lighters to the s. s. Ocean Energy. The plaintiff examined
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Mr. Muhammad Ikramuddin, an employee of its Lighterage Contractors, and Mr. Kazmi referred me to the following passage in his evidence:-- "The jetty at Juna Bunder is not covered by sheds but is open .When goods are sent to us for loading on a vessel they are brought in trucks to the export jetty and left there." Both, according to the plaintiffs and the first defendant, it was raining in Karachi on the 21st and 22nd July 1965, and, as these bales were loaded on the s. s. Ocean Energy on the 21st and 22nd July Mr. Kazmi submitted that it should be presumed that these bales had been damaged by rains whilst they were lying in the open at Juna Bunder after they had been left there by the first plaintiff, therefore, according to learned counsel, the first defendant was responsible for the damage in dispute. But according to the principle contained in Carver's observations, as the Lighterage Contractors were the agents of the first plaintiff and not of the first defendant, it is clear That the first defendant's responsibility did not commence until these bales had been loaded from the lighters on to the s. s. Ocean Energy. 14.Additionally, the argument of learned counsel is utterly fallacious on other grounds also. In the first place, the plaintiffs have not produced any evidence to show that these bales had been brought in good order and condition by their trucks to Juna Bunder, Secondly, there is no evidence to show when these bales had been brought to Juna Bunder and how long they had remained there before their removal by the first plaintiff's Lighterage Contractors. Thirdly, even the first plaintiff's Manager, Mr. Iqbal Hussain, who was a most unreliable witness, did not say that the first plaintiff had ever informed the first defendant that it had left these bales at Juna Bunder, therefore the argument that the first defendant became responsible for the custody of these bales when it was not even aware that they had been brought to Juna Bunder is totally without merit, and the first defendant is not liable for the damage to these bales of cotton piece goods. 15.I now turn to the plaintiffs' claim for damage to its consignment of bales of cotton yarn shipped under Bill of Lading No, 338. It is admitted before me that these bales had been loaded by the first plaintiff into railway wagons at Thola Produce Yard, brought in these wagons to the quay side and discharged there by the K. P. T. after which they were loaded on the s. s. Ocean Energy. Mr. Kazmi feebly argued that the first defendant's responsibility as carrier commenced when the first plaintiff had loaded these bales into the K. P. T's railway wagons. But there is neither any evidence of the condition of these bales when they were loaded into railway wagons nor any evidence to show when they had been so loaded, or that the first defendant had been informed about it. Mr. Kazmi therefore did not press this argument. 16.Learned counsel next submitted that the first defendant's responsibility as a carrier for these bales began as soon as they had been discharged on the quay side from the railway wagons of the Karachi Port Trust. But learned counsel could not refer me to any provisions either of the said Act or of the Karachi Port Trust Act in support of this argument nor have I found any provisions in these Acts in support of this argument. The plaintiff's have also produced no evidence of the condition in which these bales had been discharged from the railway wagons or of the date and time when they were so discharged. There is also no evidence to show that the first defendant had been informed about this discharge, much less any evidence to show that the first defendant had accepted responsibility for these bales when they were discharged from the railway wagons or given a receipt for them, therefore learned counsel's argument is not supported by the observations of Carver on which he relied. 17.Finally, learned counsel, who has argued a difficult case with ability, submittal that the first defendant's responsibility as a carrier under the said Act began as soon as it had commenced loading these bales, that it was raining heavily whilst these bales were being loaded so that they had got wet during the loading operations, therefore the first defendant was liable for the damage in dispute. As I have explained in para. 10, the first defendant's responsibility as a carrier under the
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provisions of the said Act began not when the bales had crossed the ship's rail or been unloaded from its tackle on its deck (which is, in the words of Devlin, J. the second stage of the loading operations), but as soon as the bales had been lifted by the ship's tackle (which is described by Devlin J. as the first stage of the loading operations), therefore although the endorsements on the bills of lading are prima facie evidence of the condition of these bales, as these endorsements relate to their condition in the second stage of the loading operations, the plaintiffs are not precluded by these endorsement from proving that these bales had not been damaged at the first stage of the loading operations. However, as the bills of lading are prima facie evidence of the condition of cargo…
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